DCIT, New Delhi v. Shri Shiva Swaroop Mathur, New Delhi

ITA 3465/DEL/2011 | 2007-2008
Pronouncement Date: 16-09-2011 | Result: Allowed

Appeal Details

RSA Number 346520114 RSA 2011
Assessee PAN AAFPM2325R
Bench Delhi
Appeal Number ITA 3465/DEL/2011
Duration Of Justice 2 month(s) 9 day(s)
Appellant DCIT, New Delhi
Respondent Shri Shiva Swaroop Mathur, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 16-09-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted G
Tribunal Order Date 16-09-2011
Date Of Final Hearing 07-09-2011
Next Hearing Date 07-09-2011
Assessment Year 2007-2008
Appeal Filed On 07-07-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G DELHI BEFORE SHRI R.P. TOLANI AND SHRI K.G. BANSAL ITA NO. 3465(DEL)/2011 ASSESSMENT YEAR: 2007-08 DEPUTY COMMISSIONER OF INCOME SHIVA SWAROOP MATHUR TAX CIRCLE 41(1) NEW DELHI. VS. D- 11/2335 VASANT KUNJ NEW DELHI. PAN: AAFPM2325R C.O. NO. 3 03(DEL)/2011 (ARISING OUT OF ITA NO. 3465(DEL)/2011) ASSESSMENT YEAR: 2007-08 SHIVA SWAROOP MATHUR DEPUTY COMMISSIONER OF D-11/2335 VASANT KUNJ VS. I NCOME-TAX CIRCLE 41(1) NEW DELHI. NEW DELHI. (APPELLANT) (RESPON DENT) DEPARTMENT BY : SHRI ROHIT GARG SR. DR ASSESSEE BY: SHRI S.C. LADI SR. ADVOCATE & SHRI NEERAJ KUMAR SHARMA ADVOCATE DATE OF HEARING : 07.09.2011 DATE OF PRONOUNCEMENT: .09.2011. ORDER PER K.G. BANSAL : AM THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION O F THE ASSESSEE EMANATE FROM THE ORDER OF THE COMMISSIONER OF INCO ME-TAX (APPEALS)- XXX NEW DELHI PASSED ON 13.04.2011 FOR ASSES SMENT YEAR 2007-08. BOTH THE PARTIES HAVE CHALLENGED THE ESTIMATION OF THE FAIR MARKET VALUE ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 2 (FMV FOR SHORT) AS ON 01.04.1981 WHICH WAS DETE RMINED FOR THE PURPOSE OF COMPUTING LONG-TERM CAPITAL GAIN ON TRANSFER OF THE LAND. 1.1 FOR READY REFERENCE THE GROUNDS TAKEN BY T HE REVENUE ARE REPRODUCED AS UNDER:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) HAS ERRED IN: I) DIRECTING THE AO TO TAKE THE COST OF ACQUISITI ON OF LAND AS ON 01.04.1981 @ RS. 1250/- INSTEAD OF @ RS. 285 /- PER SQ. YD. RESULTING INTO REDUCTION OF LTCG FROM RS. 19 35 380/- TO RS. 1 95 480/- AS ADDED BY THE AO. II) IN REDUCING THE ABOVE ADDITION THE ORDER OF THE LD. CIT(A) IS BAD AS WELL AS PERVERSE IN LAW AS IT SUMMARILY DISMISSES THE MATERIAL ON RECORD WITHOUT DISCUSS ING AND REBUTTING THE SAME (THOUGH CLEARLY BROUGHT OUT ON RECORD IN THE ASSESSMENT ORDER) AND HAS BEEN DECIDED UPON BY IGN ORING THE FACTS ALL TOGETHER. 1.2 SIMILARLY THE GROUNDS TAKEN BY THE ASSESSEE ARE ALSO REPRODUCED AS UNDER:- (I) BECAUSE THE DEPARTMENTAL APPEAL IS BAD IN LAW A S WELL AS ON FACTS AND IS LIABLE TO BE DISMISSED. (II) BECAUSE THE LD. CIT(APPEALS) HAS NOT ERRED IN DIR ECTING THE AO TO RE-COMPUTE THE CAPITAL GAIN TAKING THE COST OF LAN D AS ON 1.4.1981 ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 3 @ RS. 1250/- PER SQ. YD. AFTER CONSIDERING THE V ALUATION REPORT OF APPROVED VALUER. (III) BECAUSE THE LD. LOWER AUTHORITIES FAIL TO APPRECI ATE THE FMV OF THE LAND AS ON 1.4.1981 ASCERTAINED BY THE REGIS TERED APPROVED VALUER BASED UPON COGENT REASONS AND 9 FACTOR FOR DETERMINING THE FMV OF THE LAND AS ON 1.4.1981 @ RS. 1500/- P ER SQ. YD. (IV) BECAUSE THE LD. LOWER AUTHORITIES HAS ERRED FOR NOT REFERRING THE MATTER TO DVO UNDER SECTION 55A OF THE INCOME-TAX ACT 1961 FOR OBTAINING THE FMV OF THE LANDS AS ON 1.4.1981 . (V) BECAUSE THE LD. LOWER AUTHORITIES HAS ALSO ERR ED IN ADOPTING THE FMV OF THE LAND ON THE BASIS OF CIRCLE RATE FIXED BY THE KANPUR DEVELOPMENT AUTHORITY IGNORING THE FACT THAT CIRC LE RATE CAN BE SUBSTITUTED UNDER SECTION 50C FOR THE PURPOSE OF DETERMINING THE SALE CONSIDERATION FOR COMPUTATION OF CAPITAL GAIN UNDER THE ACT. THERE IS NO PROVISION UNDER THE ACT THAT FMV OF T HE LAND WILL BE REPRESENTED BY THE CIRCLE RATE FIXED BY REGISTE RING AUTHORITIES FOR THE PURPOSE OF COLLECTION OF STAMP DUTY. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND RESIDENT IN INDIA. THE RETURN OF INCOME WAS FILED ON 02.07.2007 DECLARING TOTAL INCOME OF RS. 6 48 940/-. THE CA SE WAS TAKEN UP FOR SCRUTINY BY ISSUING NOTICE U/S 143(2) ON 21.07 .2008 BY POST. IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE INCOME DECLARED BY THE ASSESSEE INCLUDED LONG-TERM CAPITAL GAIN ARISING FROM SALE OF PREMISES SITUATED AT SWAROOP NAGAR AND GUTAIYA KANPUR. THESE PROPERTIES ARE SITUATED ADJACENT TO EACH OTHER. THE DISPUTE IS REGARDING VALUATION OF LAND ONLY. THE ASSESSEE COMPUTED T HE FMV OF THE LAND AS ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 4 ON 01.04.1981 @ RS. 1 500/- PER SQ. YD. IN TH IS CONNECTION IT WAS NOTED BY THE AO THAT THE DISTRICT MAGISTRATE KANPUR HAD NOTIFIED THE RATE OF LAND IN THIS AREA IN THE YEAR 1981 AT ABOUT RS . 285/- PER SQ. YD. THUS THE RATE ADOPTED BY THE ASSESSEE WAS 5.25 TIME S THE RATE NOTIFIED BY THE DISTRICT MAGISTRATE. IN VIEW OF THIS WIDE DIFF ERENCE THE AO REQUIRED TO JUSTIFY THE RATE ADOPTED BY HIM. IT WAS SUB MITTED THAT THE ASSESSEE HAD FILED VALUATION REPORT DATED 30.11.2006 FROM THE REGISTERED VALUER WHO ESTIMATED THE FMV AT RS. 1 500/- PER SQ. YD. T HE REASONS FOR ADOPTING THIS RATE HAVE BEEN MENTIONED IN THE REPORT. THE ASSESSEE HAS COMPUTED THE CAPITAL GAINS ON THE BASIS OF THIS REPORT. IT WA S FURTHER SUBMITTED THAT THE DISTRICT MAGISTRATE HAD NOTIFIED THE RATE FOR THE PURPOSE OF COLLECTION OF STAMP DUTY WHICH MAY NOT REPRESENT THE FAIR MA RKET RATE OF THE LAND. THE AO REFERRED TO VARIOUS OBSERVATIONS MADE IN TH E VALUERS REPORT THAT (I) THE LAND RATES APPROVED BY THE KANPUR DEVELOPMENT AUTHORITY (KDA FOR SHORT) DENOTE THE FAIR MARKET RATE AND (II) IT FIXED THE LAND RATE IN THE YEAR 1987-88 AT RS. 2 000/- PER SQ. MT. STARTI NG WITH THIS RATE OF RS. 2 000/- PER SQ. MT. IN THE YEAR 1987-88 THE RE GISTERED VALUER ARRIVED AT THE FAIR MARKET RATE AS ON 01.04.1981 AT RS. 1 2 00/- PER SQ. YD. BY APPLYING INFLATION INDEX NOTIFIED BY THE CBDT FR OM YEAR TO YEAR. HE ENHANCED THE RATE FURTHER BY MENTIONING THAT THE PROPERTY IS SITUATED IN ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 5 THE CORNER AND IT IS SITUATED NEAR MOTI JHEEL AND M.G. ROAD. THUS AN ADDITION OF RS. 300/- PER SQ. YD. WAS MADE LEA DING TO ESTIMATION OF THE VALUE AT RS. 1 500/- PER SQ. YD. FOR THE SAKE OF READY REFERENCE THE REASONS FOR ADOPTING HIGHER VALUE STATED BY TH E REGISTERED VALUER ARE AS UNDER:- 1. SOLD PREMISES UNDER FREEHOLD STATE MEANING THE REBY THAT IT CAN BE UTILIZED AS PER THE WISH OF THE PURCHASER FOR COM MERCIAL PURPOSE ALSO AS TODAY THAT THE FRONT CORNER PORTION OF THIS PREMISES IS CONSTRUCTED IN TO HIGHLY IMPOSING COMMERCIAL COMPL EX BY RATAN GROUP AFTER DEMOLITION OF THE OLD STRUCTURE. NEAR LY 50% OF THE PREMISES AREA IS SET FOR THE FURTHER CONSTRUCTI ON OF BEST CHOICE. PREVIOUSLY ALSO IT WAS NOT RESIDENTIAL AND IN FORM OF SCHOOL ONLY WHICH HAS BEEN DEMOLISHED SOON AFTER THE SALE DE ED OF THIS PREMISES. 2. THIS PREMISES IS ADJOINING TO ALL COMMERCIAL COMPL EXES THERE I.E. ALLAHABAD BANK RATAN CANCER INSTITUTE & ALL COMMER CIAL ESTABLISHMENTS NEARBY IN ALL NEWLY CONSTRUCTED C OMMERCIAL COMPLEXES AS WELL AS PRIVATE NURSING HOMES THEREON FACING MALL ROAD. 3. THIS PREMISES IS BEST SITUATED SERENE AREA IN FR ONT OF THE MOST PRESTIGIOUS MOTI JHEEL AREA FULL OF LAWN AND GAR DENS I.E. TULSI UPWAN AND FAMOUS CHILDRENS PARK. 4. THIS PREMISES IS ALSO SITUATED IN FRONT OF KANPUR NAGAR NIGAM & KANPUR DEVELOPMENT AUTHORITY MOTIJHEEL LAWN AS B EST DEVELOPED AREA OF KANPUR METROPOLIS. 5. THIS PREMISES IS BEST SITUATED ON THE MALL ROAD AN D IN THE BEST POSH DEVELOPED AREA SWAROOP NAGAR OF KANPUR BEING AT THE HEAR OF KANPUR METROPOLIS. ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 6 6. THIS PREMISES IS SITUATED NEAR ALL HIGH CLASS HOSPITALS I.E. HALLET HOSPITAL MEDICAL COLLEGE J.K. CANCER INSTITUTE & DIRECTOR OF INDUSTRIES WITHIN 1 KM. RANGE. 7. THIS PREMISES IS SITUATED ON THE CORNER LOCATION FACING TWO ROADS I.E. MALL ROAD ON SOUTH LEADING TO FAMOUS NARENDRA MOHAN OVERBRIDGE AND OTHER ROAD ON WEST IN SWAROOP NAGAR BEST POSH RESIDENTIAL AREA OF THIS METROPOLIS HAVING ABOUT A DOZEN NEWLY CON STRUCTED PRESTIGIOUS MULTI-STORYED COMPLEXES THERE. 8. THIS PREMISES IS WELL CONNECTED TO G.T. ROAD AT HA RDLY 1 KM. JUST AFTER MOTIJHEEL LAWNS ON ITS FRONT SOUTHERN SIDE. 9. THIS AREA IS TODAYS MOST EXPENSIVE AREA OF KANPUR METROPOLIS. 2.1 THE AO CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE HIM. IT IS MENTIONED THAT FOR ESTIMATING THE FMV OF LAND THERE ARE TWO BASIC CRITERIA NAMELY -(A) COMPARABLE SALE INSTANCE AND (B) RATE NOTIFIED BY THE GOVERNMENT AUTHORITY KNOWN AS CIRCLE RATE. THE REGISTERED VALUER HAS NOT FURNISHED ANY COMPARABL E SALE INSTANCE. HOWEVER HE HAS FURNISHED THE DETAILS OF CIRCL E RATE NOTIFIED FOR THE LOCALITY IN WHICH THE PROPERTY IS SITUATED. THIS V ARIES BETWEEN RS. 235/- PER SQ. YD. TO RS. 285/- PER SQ. YD. IT IS FURTHER M ENTIONED THAT THE CIRCLE RATE NOTIFIED BY THE DISTRICT MAGISTRATE AT THE TIME OF SALE WAS RS. 14 000/- PER SQ. MT. WHICH IS MORE OR LESS THE SAME AS THE RATE AT WHICH THE PROPERTY HAS BEEN SOLD. THEREFORE THE CIRCLE RATE NOTIF IED BY THE DISTRICT MAGISTRATE IN FINANCIAL YEAR 1981-82 GIVES A FAIR PICTURE OF THE RATE ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 7 PREVAILING IN THE AREA AT THAT TIME. ACCORDING LY HE ADOPTED THE HIGHEST RATE IN THE RANGE NOTIFIED BY THE DISTRICT MAGIS TRATE BEING RS. 285/- PER SQ. YD. THE CAPITAL GAIN HAS BEEN COMPUTED AT RS . 19 35 380/- BY ADOPTING THIS RATE AND AFTER GRANTING DEDUCTION U/S 54E C IN RESPECT OF INVESTMENT IN REC BONDS. 3. AGGRIEVED BY THIS ORDER THE ASSESSEE MOVED AN APPEAL BEFORE THE LD. CIT(APPEALS). THE ARGUMENTS MADE BEFORE THE L D. CIT(APPEALS) ARE MORE OR LESS SAME AS MADE BEFORE THE AO. AN AFFIDAVIT WAS ALSO FILED IN WHICH IT IS INTER-ALIA MENTIONED THAT THE PRO PERTY WAS JOINTLY HELD BY FIVE CO-OWNERS AND HE HAD ONLY 1/5 TH INTEREST IN THE PROPERTY. THE RETURNS HAVE BEEN FILED BY OTHER CO-OWNERS AND ASSESSMENT S HAVE BEEN COMPLETED IN THEIR CASES U/S 143(1). THE CASE OF THE ASSESSEE ON THIS BASIS WAS THAT THE INCOME RETURNED BY OTHER CO-OWNERS HAS BEEN ACCEPTED BY THE REVENUE IN RESPECT OF THIS ISSUE. THEREFORE HIS RETURN SHOULD ALSO BE ACCEPTED. THE LD. CIT(A) CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE HIM. HE FOUND SUBSTANCE IN THE SUBMISSIONS OF TH E ASSESSEE BUT PERSUADED HIM TO ACCEPT THE RATE AS ON 01.04.198 1 AT RS. 1 250/- PER SQ. YD. THUS THE APPEAL WAS PARTLY ALLOWED. THE REL EVANT PORTION OF HIS ORDER CONTAINED IN PARAGRAPH NO. 5 IS REPRODUCED OVERLE AF:- ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 8 5. THE APPELLANT HAS GOT 1/5 TH OF THE SALE PROCEEDS IN RESPECT OF 113/70 SWAROOP NAGAR PLOT NO. 81 & 82 BLOCK- C SCHEME VII GUTAIYA KANPUR SOLD ON 15.11.2006 WHICH WA S DULY SHOWN IN THE INCOME-TAX RETURN IN THE APPELLANT AND THE OTHER BROTHER/CO-OWNERS ARE STAYING AT KANPUR AND THEY HAVE FILED THEIR I.T. RETURNS FOR ABOVE A.Y. AT KANPUR INCO ME-TAX OFFICE. THEIR RETURNS ARE ACCEPTED BY DEPARTMEN T AFTER PROCESSING U/S 143(1) OF THE INCOME-TAX ACT 1961. THE APPELLANT AND HIS OTHER 4 BROTHERS GOT EQUAL S HARES IN THE ABOVE PROPERTY SALE CONSIDERATION WHERE THE AO OF THE APPELLANT HAD CHARGED CAPITAL GAINS TAX AT HIG HER RATE BUT OTHER BROTHERS RETURNED INCOME IS ACCEPTED BY DEP ARTMENT U/S 143(1) OF THE I.T. ACT. THE LOCAL ASSESSING OFFI CER HAVE NOT CHALLENGED THE BEST VALUE OF 1981 FOR COMPUTATION OF CAPITAL GAIN OR THEY HAVE NOT DISPUTED THE UNDER-VALUATI ON OF CAPITAL GAIN TAX. THEREFORE THE APPELLANT GET THE BENEF IT IN HIS SUPPORT AS THE OTHER COPARCENERS WHO HAVE RECEIVED SIM ILAR AMOUNT ON SALE PROCEED OF THE LAND HAVE NOT PAID ANY EXT RA TAX. HOWEVER ON MY HEARING WITH ADVOCATE I HAVE PERS UADED THEM TO AGREE 1981 VALUE OF RS. 1250/- PER SQ. YD . IN POSH AREA OF KANPUR. THE ASSESSEE HAD CLAIMED VALUE AS RS. THE AO IS DIRECTED TO COMPUTE CAPITAL GAIN BY ADOPTING RS. 1250/- PER SQ. YD. AS 1981 VALUE AFRESH AFTER GIVING ASSESSEE AN OPPORTUNITY OF BEING HEARD. 4. BEFORE US THE LD. DR REFERRED TO THE FINDING S OF THE AO AND THE LD. CIT(APPEALS). THESE FINDINGS HAVE ALREADY BEEN SUM MARIZED BEFORE US. IT IS SUBMITTED THAT ACCEPTANCE OF RETURNS OF OTHER CO-OWNERS DOES NOT BY ITSELF LEAD TO THE CONCLUSION THAT FMV AS ON 01. 04.1981 DECLARED BY THE ASSESSEE IS CORRECT. THE CASES ARE SELECTED FOR SCRUTINY BASED UPON CERTAIN CRITERIA WHICH MAY NOT HAVE BEEN APPLICABLE TO T HE CASE OF THE OTHER CO- OWNERS. THEREFORE PROCESSING OF THEIR RETURNS U/S 143(1) CANNOT BE ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 9 CONSTRUED AGAINST THE REVENUE AS SUCH PROCESSING DOES NOT AMOUNT TO CONSIDERING AND DECIDING THE CASE ON MERITS. IT I S STRESSED THAT THE SALE PRICE IS IN THE VICINITY OF THE CIRCLE RATE NOTIFI ED BY THE DISTRICT MAGISTRATE. ON THE OTHER HAND THE ASSESSEE HAD TRIED TO MIN IMIZE THE INCIDENCE OF CAPITAL GAIN TAX BY MAKING A REVERSE CALCULATIO N STARTING FROM THE RATE NOTIFIED BY THE KDA IN THE YEAR 1987-88. FOR THI S PURPOSE COST INFLATION INDEX NOTIFIED BY THE BOARD HAS BEEN ADOPTED WHIC H DOES NOT REPRESENT APPRECIATION IN THE VALUE OF LAND BUT REPRESENTS OVERALL IMPACT OF YEARLY INFLATION. THEREFORE IT IS CONTENDED THAT THE CA LCULATION SUFFERS FROM THE INFIRMITY. IT IS FURTHER SUBMITTED THAT THE LOC ATIONAL ADVANTAGES MENTIONED BY THE REGISTERED VALUER PERTAIN TO THE PRESENT STATUS OF THE LAND AND NOT THE STATUS OF THE LAND AS IT EXISTED ON 01.04.1 981. THE AO HAS TO ESTIMATE THE FMV AS ON 01.04.1981 LOOKING TO ALL RELEVAN T FACTORS EXISTING AT THAT POINT OF TIME. THE BEST CRITERION WOULD HAVE B EEN COMPARABLE SALE INSTANCE WHICH HAS NOT BEEN CITED BY THE ASSESSEE OR THE REGISTERED VALUER. THE NEXT BEST ALTERNATIVE WOULD BE THE CIRCLE RA TE WHICH HAS BEEN FOUND TO BE FAIRLY ACCURATE ON THE DATE OF SALE. IN SUCH A SITUATION THE AO WAS JUSTIFIED IN ADOPTING THE CIRCLE RATE NOTIFIED BY THE DISTRICT MAGISTRATE. IN FACT LOOKING TO LOCATIONAL ADVANTAGE HE HAS A DOPTED THE HIGHER-END RATE NOTIFIED BY THE DISTRICT MAGISTRATE. IT IS ALSO SUBMITTED THAT THE ORDER OF THE ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 10 LD. CIT(A) IS NOT A SPEAKING ORDER. HE HAS BASE D HIS ORDER ON AN IRRELEVANT CONSIDERATION THAT THE RETURN OF OTHER CO-OWNERS HAVE ONLY BEEN PROCESSED U/S 143(1) LEADING TO ACCEPTANCE OF THE CAPITAL GAINS DECLARED BY THEM. THIS DOES NOT AMOUNT TO DECISION ON MERITS AS HE HAS NOT GONE AT ALL INTO VARIOUS ARGUMENTS FURNISHED BY THE AO IN THE ASSESSMENT ORDER. THEREFORE IT IS URGED THAT THE ORDER OF THE AO MAY BE RESTORED AND THAT OF THE LD. CIT(APPEALS) MAY BE SET ASIDE. 4.1 IN REPLY THE LD. COUNSEL FOR THE ASSESSEE R EFERRED TO THE FINDING OF THE LD. CIT(A) CONTAINED IN PARAGRAPH NO. 5 OF THE IMPUGNED ORDER. IT IS SUBMITTED THAT THE FMV TAKEN BY THE ASSESSEE I S BASED UPON THE REPORT OF THE REGISTERED VALUER WHO HAS GIVEN REASONS FO R HIS HIGHER ESTIMATION. THIS REPORT HAS NOT BEEN PROVED TO BE WRONG BY BRI NGING ANY OTHER VALUATION REPORT ON RECORD. RELIANCE HAS BEEN PLACED ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF HINDUSTAN MOTORS LTD. VS. APPROPRIATE AUTHORITY (2001) 249 ITR 424 IN WHICH IT HAS BE EN HELD THAT THE VALUE FIXED BY REGISTERING AUTHORITY FOR LEVYING STAM P DUTY IS NOT APPLICABLE FOR DETERMINING MARKET VALUE UNDER CHAPTER XXC REGAR DING PRE-EMPTIVE PURCHASE OF PROPERTIES. FURTHER RELIANCE HAS BE EN PLACED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF NEW KALINDI KAMAVATI CO- ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 11 OP. HOUSING SOCIETY LTD. VS. STATE OF GUJARAT & OR S. IN WHICH IT HAS BEEN HELD THAT THE VALUATION BY AUTHORITIES LEVYING STAMP DUTY REFLECTS THE PROBABLE MARKET VALUE AND IT DOES NOT CONSTITUTE A CONCLUSIVE EVIDENCE. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION IN THE CASE OF KRISHNA KUMAR RAWAT & OTHERS VS. UNION OF INDIA & OTHERS (1994) 214 ITR 610 (RAJASTHAN) IN WHICH IT HAS BEEN HELD THAT MARKET RATE NOTIFIED BY SUB- REGISTRAR FOR THE PURPOSE OF REGISTRATION OF PROPER TIES HAS NO APPLICATION FOR THE PURPOSE OF CHAPTER XXC REGARDING PRE-EMPTIVE P URCHASE OF PROPERTIES. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION IN THE CASE OF SHRI PYARE MOHAN MATHUR HUF VS. ITO FOR ASSESSMENT YEAR 200 5-06 IN ITA NO. 471/AGRA/2009 DATED 21.04.2011 A COPY OF WHICH HAS BEEN PLACED ON RECORD. IN THIS CASE THE AO HAD BASED HIS VALU ATION ON THE REPORT OF THE INSPECTOR. THE VALUATION SO MADE WAS NOT ACCEPTED BY THE TRIBUNAL. RELIANCE HAS ALSO BEEN PLACED ON THE DECISION OF H ONBLE GUJARAT HIGH COURT IN THE CASE OF NAMITA SARKAR VS. CIT (200 5) 146 TAXMAN 436 IN WHICH IT HAS BEEN HELD THAT THE VALUATION MADE B Y A VALUER IS SIMPLY A PIECE OF EVIDENCE. THE AUTHORITIES ARE FREE TO AGREE WITH IT. AT THE SAME TIME IF IT APPEARS THAT THE VALUATION IS INCORRE CT OR UNRELIABLE IT WOULD BE OPEN TO THE AUTHORITIES TO REJECT THE SAME AND IF THERE IS NO EVIDENCE WITH REGARD TO MARKET VALUE OF THE PROPERTY THE AUT HORITIES WOULD BE JUSTIFIED ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 12 IN COMPUTING THE VALUE ON WELL ESTABLISHED PRINCI PLES OF VALUATION. ON THE FACTS OF THE CASE THE HONBLE COURT CAME TO THE C ONCLUSION THAT THE TRIBUNAL WAS JUSTIFIED IN REJECTING THE VALUATION REPORT. ONCE IT IS DONE IT WAS ITS RESPONSIBILITY TO VALUE THE PROPERTY FOLLOWING ACCEPTED PRINCIPLES OF VALUATION WHICH HAD NOT BEEN DONE. THUS THE ORDE R WAS SET ASIDE. THUS IT IS URGED THAT THE VALUE DECLARED BY THE ASSESSE E MAY BE ACCEPTED. 5. WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE ASSESSEE WAS A CO-OWNER OF THE PROPERTY OWNED BY FIVE BROTHERS. THE PROPERTY WAS SOLD I N THIS YEAR AND HE GOT HIS 1/5 TH SHARE IN THE SALE PROCEEDS. FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS THE ASSESSEE OBTAINED REPORT OF THE REGI STERED VALUER DETERMINING FMV OF THE LAND AS ON 01.04.1981. IN THIS REPORT THE LAND WAS VALUED AT RS. 1 500/- PER SQ. YD. THE REGISTERED VALUER A LSO ESTIMATED THE VALUE OF BUILDING ON THE LAND. THIS VALUE HOWEVER IS NOT UN DER DISPUTE. THE AO FOUND THAT THE REGISTERED VALUER DID NOT SUBMIT ANY COMPARABLE SALE INSTANCE. HE VALUED THE LAND BY TAKING THE RAT E NOTIFIED BY KDA FOR THE YEAR 1987-88 AS THE BASE. THE VALUE AS ON 01. 04.1981 WAS CALCULATED BY USING INFLATION INDEX NOTIFIED BY THE BOARD. THE VALUE OF RS. 1 200/- PER SQ. YD. SO OBTAINED WAS FURTHER ENHANCED TO RS. 1 500/- PER SQ. YD. DUE TO ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 13 LOCATIONAL ADVANTAGES OF THE PROPERTY. MOST OF THESE ADVANTAGES WERE AVAILABLE AT THE TIME OF SALE. HOWEVER THE PROP ERTY HAD TO BE VALUED LOOKING TO ITS POSITION AS ON 01.04.1981. HE ALS O FOUND THAT THE RATE NOTIFIED BY THE DISTRICT MAGISTRATE AT THE TIME OF SALE ROUGHLY CORRESPONDED TO THE RATE OF SALE OF THE LAND. SINCE THE VALUATIO N SUFFERED INFIRMITY HE ADOPTED THE RATE NOTIFIED BY THE DISTRICT MAGIST RATE. THE LD. CIT(APPEALS) PASSED A SUMMARY ORDER AND DETERMINED THE FMV ON THE BASIS OF THE RATE OF RS. 1250/- PER SQ. YD. THE QUESTION IS WHETHER THE RATE SO ADOPTED BY THE LD. CIT(A) IS JUSTIFIED ON THE FACTS OF THE CAS E? WE FIND THAT THE REPORT MENTIONS ABOUT THE RATE NOTIFIED BY THE DISTRICT MAGISTRATE IN THE AREA BETWEEN RS. 235/- PER SQ. YD. TO RS. 285/- PER SQ. YD. THE REPORT DOES NOT IN ANY MANNER SHOWS THAT THIS RATE WAS NOT THE P REVALENT RATE. THE REPORT IS BASED ON THE RATE NOTIFIED BY THE KDA IN T HE YEAR 1987-88 AT RS. 2 000/- PER SQ. MT. THIS RATE HAS BEEN DISCOU NTED TO ARRIVE AT THE RATE OF RS. 1 200/- PER SQ. YD. THIS AGAIN HAS BEEN EN HANCED BY RS. 300/- PER SQ. YD. THIS METHOD IS NOT A RECOGNIZED METHOD OF VA LUATION. IN THE CASE OF NAMITA SARKAR THE HONBLE CALCUTTA HIGH COURT H AS HELD THAT THE AUTHORITIES WILL BE WITHIN THEIR RIGHT TO ACCEPT O R REJECT THE VALUATION REPORT. HOWEVER IF THE VALUATION REPORT IS SOUGHT TO BE RE JECTED IT HAS TO BE DONE BY BRINGING PROPER EVIDENCE ON RECORD. IN THIS CASE THE VALUATION REPORT ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 14 HAS BEEN ACCEPTED BY THE AO IN THE WEALTH-TAX RETU RN FOR ASSESSMENT YEAR 1987-88. THEREFORE THERE WAS SOME EVIDENCE REGA RDING THE VALUATION AS ON 31.03.1987 FROM WHICH THE REVERSE CALCULATION HAS BEEN MADE. THE HONBLE COURT CAME TO THE FURTHER CONCLUSION THAT IF THE VALUATION REPORT IS TO BE REJECTED IT WOULD BE PREFERABLE TO OBTAIN REPORT FROM ANOTHER VALUER. COMING TO THE FACTS OF THE CASE THERE ARE REASONS FOR COMING TO THE CONCLUSION THAT THE REPORT OF THE REGISTERED VALUER IS NOT ACCEPTABLE. HOWEVER THIS REPORT DOES MAKE MENTION OF THE R ATE SPECIFIED BY THE KDA FOR THE YEAR 1987-88. THEREFORE IT WOULD BE MORE APPROPRIATE IF A VALUATION REPORT IS OBTAINED FROM THE DEPARTMENTAL VALUATION OFFICER. THE TWO REPORTS MAY THEN BE WEIGHED SO AS TO COME TO A PROPER CONCLUSION ABOUT THE VERACITY OF THE REPORT OF THE REGISTERED VALUER. ACCORDINGLY WE THINK IT FIT TO RESTORE THE MATTER TO THE FILE OF THE AO FOR FURTHER ACTION IN THE MATTER AND DECIDE THE ISSUE AS PER LAW. 6. IN THE RESULT BOTH THE APPEALS ARE TREATED A S ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (R.P. TOLANI) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA ITA NO.3465(DEL)/2011 & C.O NO. 303(DEL)/2011 15 COPY OF THE ORDER FORWARDED TO:- SHRI SHIVA SWAROOP MATHUR NEW DELHI. DCIT CIRCLE 41(1) NEW DELHI. CIT(A) CIT THE DR ITAT NEW DELHI. ASSISTANT REGISTRAR.